By Sophie Yu and Farah Master
BEIJING/HONG KONG (Reuters) -In the past few months, Wang Shuyun, a 78-year-old retiree in Beijing, splashed out on an 8,000 yuan ($1,115) nutrition course to help her lose weight and lower her blood sugar, and spent 1,200 yuan on Adidas shoes.
A former civil servant with a far-above-average monthly pension of 10,000 yuan and no children, she also regularly splurges on imported milk from New Zealand.
“I focus on living a good life for myself, which I consider the most important goal,” said Wang.
She is one of some 300 million retirees in China, the core of the country’s “silver economy” that is now being aggressively promoted.
Beijing flagged “a new age” for the elderly in a 2021 policy guideline, calling for “the vigorous cultivation” of a silver economy, but this year authorities have gone into overdrive. They have issued at least 20 statements on the topic, urging companies to improve food, health and senior care services, offer more financial products and focus on new business models.
Their urgency is twofold. China is greying so rapidly that the number of people aged 60 and above is set to hit 400 million by 2035 – roughly equal to the populations of the United States and Italy combined.
At the same time, overall spending growth has been weak with younger generations losing consumer confidence, beset by a raft of economic woes from trade tensions to a debt-stressed property sector, that have resulted in deflation and job insecurity.
Economists note that China’s past four decades of rapid growth have resulted in older people having a comfortable level of savings, allowing them to spend more freely than previous older generations who lived very frugally.
According to data from research firm Euromonitor International, total consumer expenditure by Chinese households headed by people aged 60 and over is likely to have climbed 129% from 2015 to 2025, outpacing the 79% rate for the overall population.
“This suggests that mature consumers are not only growing in number but also increasing their spending at a significant pace,” said Jana Rude, Euromonitor’s senior global insight manager for consumers.
While elderly households are, on average, spending less than younger generations, in aggregate, they are a major force.
The rapid pace of their spending growth is set to become more accentuated, with Euromonitor predicting total expenditure for Chinese aged 60 and over to more than triple between 2025 and 2040 compared to a 136% jump for the total population. By 2040, it estimates the 60-plus group will account for 34% of China’s total consumer expenditure from 24% currently.
SILVER TECH
Among Chinese companies setting their sights on older consumers is Lao Feng Xiang, a century-old jewellery firm that declared it had “crossed over into silver technology” when it debuted AI glasses in June.
The glasses, it said, provide an “elderly-friendly experience”, giving assistance in reading small print items like drug labels and menus, voice navigation help if they get lost and can offer “emotional dialogue” for companionship.
Tech giant Xiaomi also says it has endeavoured to add elderly-friendly functions on its phones and televisions, as well as remote assistance features enabling children to easily control their aged parents’ living environments with smart lights and air conditioners.
Ping An, an insurance and health care conglomerate, says providing senior care services and products is a big growth area. Since late last year, it says it has launched hundreds of home-based senior care benefits, such as an AI system to monitor health and environmental risks, expanding a service that it introduced in 2021 and is now available in 75 cities.
Despite government and corporate efforts, however, economists note that at the end of the day, older people tend not to spend that much.
Moreover, while former civil servants like Wang get generous pensions, the average urban retiree in China draws a much smaller monthly pension of 3,000 yuan, while pensions for those in rural areas can be as low as 200 yuan.
Older generation spending “is unlikely to be strong enough to offset deflationary pressures or drive broader economic growth,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis.
Qiao Li, a 66-year-old retiree in Beijing, might be a case in point. One recent big purchase has been 50,000 yuan on a necklace made of wooden beads and turquoise, but in general, he prefers to use his extra cash on fresh vegetables to share with relatives.
($1 = 7.1800 Chinese yuan)
(Reporting by Sophie Yu and Farah Master; Additional reporting by Casey Hall in Shanghai; Editing by Edwina Gibbs)
Comments